Amazon announces HQ2 locations in New York and Virginia

Housing industry reacts to potential impact

Amazon announced Tuesday the locations for its second headquarters, naming Long Island City, New York, and Arlington, Virginia, as the winners of its year-long search.

Amazon’s HQ2 is expected to bring 50,000 jobs with an average salary of $100,000 over the next 15 years, plus more than $5 billion in investment over the span of 17 years.

Amazon also announced it will open an Operations Center of Excellence in Nashville that will create 5,000 jobs.

But while the influx of high-paying jobs and tax revenue could be a boost to the local economies surrounding HQ2, some are critical of the tech giant’s impact on property values and infrastructure.

The announcement Tuesday put an end to Amazon’s hunt for the ideal location of its second headquarters, which the company said required proximity to a major airport, a suburban or urban locale with more than one million residents and the ability to attract talent in the tech sector.

The company reviewed 238 bids and narrowed the search down to 20 finalists – which included Chicago, Denver, Nashville, Miami and Indianapolis – before announcing that its HQ2 would be split between two locations.

“We are excited to build new headquarters in New York City and Northern Virginia,” said Amazon Founder and CEO Jeff Bezos in a statement. “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come. The team did a great job selecting these sites, and we look forward to becoming an even bigger part of these communities.”

Housing industry experts have speculated on the effect Amazon will have on the communities surrounding its new locations.

In Seattle, where Amazon is primarily headquartered, the company’s impact has been significant, with Amazon claiming that its investments in the area injected $38 billion into the city’s economy from 2010 to 2016.

It has also had a sizable effect on Seattle’s housing market, according to Realtor.com, which said that the company’s expansion of its Seattle headquarters raised home prices in the immediate area at twice the rate of the surrounding market during the first year of construction.

“Over a longer term, sales prices are up 83% since 2008 for homes located one to five miles from Amazon's HQ1, compared with a 67% jump for homes within one mile, and a 56% jump for King County,” Realtor.com said.

Danielle Hale, chief economist for Realtor.com, predicted that areas surrounding Long Island City and Arlington will see similar spikes in value.

“Today’s announcement of HQ2 will likely have a quick impact on home prices and rents in Arlington, Virginia, and New York City. That’s because Amazon’s HQ2 is like nothing we’ve ever seen before,” Hale said. “Not only is it one of the largest company headquarters openings, but the amount of attention it’s received is unparalleled. There’s no doubt that investors and landlords in these areas have been following the news trying to get ahead of the Amazon housing boom.”

Reports from Redfin back this up. The company said its agents are receiving a flood of calls and emails with requests to view properties surrounding the new sites, and that online searches of sales in neighborhoods surrounding both cities has skyrocketed.

But ratings agency Fitch said Amazon’s impact on the housing market will be more subtle than people think.

“We do not expect much change in home prices in either location as healthy economic dynamics are already pushing up prices and supply should be sufficient to absorb the needs,” Fitch said. “The Washington, D.C., area is more likely to benefit than New York City as it has slower growth in rents and home prices.”

Fitch also said Amazon's effect on employment will be nominal, with the new jobs representing just 1.5% of the labor force in Washington, D.C., and only 0.5% of the force in New York City. But it did acknowledge that residents in the surrounding areas are likely to benefit from increased tax revenues generated by new employees and related businesses.

Predictably, Amazon’s decision has been met with some backlash as community leaders in both areas express concerns about the company’s impact on affordable housing, schools and transportation.

Alex Howe of Metro DC Democratic Socialists of America Northern Virginia Branch called for safeguards to ensure that the H2Q doesn’t displace members of the community or increase inequality.

"Arlington already has an affordable housing crisis due to gentrification and rising rents, which HQ2 will surely exacerbate,” said Howe. “Our schools are already at capacity across the region with no clear solution planned regardless of the impact of HQ2.”

New York also had its naysayers.

“New Yorkers want to know: Why are we giving away taxpayer dollars to the richest man on earth while our communities get sidelined for the funds we need to fix public transit and our growing housing crisis?” said Maritza Silva-Farrell, executive director of ALIGN, an alliance of community and labor united for a just and sustainable New York. “Amazon vaguely touts that it will create thousands of jobs, but we know that unless we demand equitable development and job creation, tech companies like Amazon will continue to leave low-income communities and communities of color out in the cold.”

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Jessica Guerin is an editor at HousingWire covering reverse mortgages and the housing wealth space. She is a graduate of Boston University and has a master’s degree from Northwestern’s Medill School of Journalism. She worked previously as the editor-in-chief of The Reverse Review magazine, which was recently acquired by HousingWire.

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